We also know from Dr Christopher Kent’s speech last week that the RBA accepts that growth in Australia’s largest trading partner, China, is currently solid “running at around 8 per cent in year-ended terms."

The RBA further concedes that iron ore prices have “increased significantly over the past two months, largely reflecting stronger demand from China owing to increased industrial activity."

That’s an understatement: spot iron ore prices are now up 80 per cent over their levels in early September when the RBA significantly downgraded its GDP projections.

Notwithstanding the RBA’s sombre view of Australia’s near-term economic prospects, growth apparently “picked up in the December quarter, with a significant contribution coming from exports."

What the RBA did not say is that Australia’s exports of iron ore and coal actually hit all-time record volumes in seasonally-adjusted terms. And there is much more export-led growth to come as the nation’s new mining production capacity is finally unleashed.

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The RBA also has rude news for the analysts and commentators who claimed that the economy was below-trend last year. It turns out that in 2012 Australia’s economy grew at a “trend pace." So we were misled.

And that is before the 125 basis points worth of rate cuts over May, June, October and December had their full impact.

This brings us to the RBA’s underlying policy paradox.

Despite savings and borrowing rates that are now “well below long-term averages", the likelihood of above-trend global growth, solid Chinese demand, very high commodity prices, a trade-weighted exchange rate that has been broadly unchanged for a number of years, above average consumer confidence, and climbing asset prices, the RBA predicated its rate cuts late last year, and the current policy stance, on the belief that GDP growth will be “a bit below trend at around 2½ per cent over 2013."

Awkwardly, the RBA’s 70 per cent “confidence interval" around this base case, which is calculated using its “forecast errors" since 1993, ranges from the economy limping along at half its trend rate to boom-time growth of 4 to 5 per cent.

That’s the difference between many more rate cuts and lots of rate hikes. And it casts into sharp relief the fundamental problem with getting too pre-emptive with policy.